Eye-Catching Stock to Track: GameStop Corp. (NYSE:GME)

On Monday, GameStop Corp. (NYSE:GME) closed with gain/decline of -1.36% to $4.3500. Recent traded volume was 6,735,286 shares versus to it an average volume of 7,251,468 shares. The company holds 102.27M shares outstanding and market cap of 393.491M.

GameStop Corp. (GME) recently stated sales and earnings for the second quarter ended August 3, 2019. The company also introduced the core tenets of its GameStop Reboot planned plan for the future.

Second Quarter Results
Jim Bell, GameStop’s chief financial officer stated, “While we experienced sales declines across a number of our categories during the quarter, these trends are consistent with what we have historically observed towards the end of a hardware cycle. We will continue to manage the underlying businesses to produce meaningful cash returns, while maintaining a strong balance sheet and investing responsibly in our planned initiatives.”

GameStop’s second quarter total global sales reduced 14.3% (13.1% in constant currency) to $1.3B, resulting in a consolidated comparable store sales decrease of 11.6%.

  • New hardware sales reduced 41.1%, reflective of recent announcements for next generation console launches in 2020.
  • New software sales reduced 5.3%, with growth in Nintendo Switch software titles over offset by weaker title launches across other consoles in the quarter contrast to last year.
  • Accessories sales reduced 9.5%.
  • Pre-owned sales declined 17.5% with declines in hardware and software.
  • Digital receipts reduced 11.2% to $227.2MBecause of weaker title launches in the quarter contrast to last year.
  • Collectibles sales increased 21.2%, with continued strong double-digit growth in both domestic and international stores.

GameStop’s second quarter GAAP net income (loss) was ($415.3)M, or ($4.15) per diluted share, contrast to net income (loss) of ($24.9)M, or ($0.24) per diluted share, in the prior-year quarter, which included the Spring Mobile business. Second quarter fiscal 2019 results include asset impairment charges and other items of $400.9M ($381.6M net of taxes), or $3.82 per diluted share, primarily related to impairment of goodwill. Second quarter fiscal 2018 results included a non-operating tax charge of $29.6M, or $0.29 per diluted share.

Not Including the $400.9M of impairment charges and other items, GameStop’s adjusted net income (loss) from continuing operations for the second quarter was ($32.0)M or ($0.32) per diluted share, contrast to net income (loss) from continuing operations of ($10.2)M, or ($0.10) per diluted share, in the prior-year quarter.

A reconciliation of non-GAAP results, including adjusted net income (loss) from continuing operations and adjusted operating earnings from continuing operations, to its most directly comparable GAAP financial measure is included with this release (Schedule III).

Capital Allocation Update
On July 10, 2019, GameStop completed a modified Dutch auction tender offer to purchase 12,000,000 shares of its ordinary stock at $5.20 per share for an aggregate cost of $62.4M, not including fees and expenses. The company is committed to returning excess capital to shareholders as appropriate and presently has about $237M remaining under the existing share repurchase authorization. During the quarter, the company reduced its outstanding debt by $49.8M, bringing the year-to-date reduction in debt to $401.7M with $419.1M of long-term debt remaining on the balance sheet at quarter end.

EPS growth in past five years was -36.10% while sales growth past 5 years was measured at -1.70%. The short ratio in the company’s stock is documented at 8.01 and the short float is around of 67.01%.

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